Prudential plc reports increases in half-year profits

Completion of key transaction will sharpen firm’s focus on emerging markets of Asia and Africa

Prudential plc reports increases in half-year profits

Insurance News

By Gabriel Olano

Prudential plc has released its financial results for the first half of 2021, with adjusted operating profit of US$1.57 billion (SG$2.13 billion), up 22% year over year, on an actual exchange rate basis.

The insurer’s annual premium equivalent sales in Asia and Africa increased by 21% to US$2.08 billion, and its new business profit grew by 29% to US$1.57 billion.

Prudential CEO Mike Wells credited the strong Asia and Africa performances to the group’s agency force of around 560,000 agents and bank network of over 28,000 branches.

“Our agency and bank channels were supported by our digital transformation during the period,” Wells said. “We are developing the capability to become a digitally enabled organisation with the capacity to serve 50 million customers by 2025. We are focused on digitalising many of our products, services and experiences so that they can be delivered by Pulse, our digital platform and ecosystem.”

According to Wells, from Pulse’s launch in 2019 to Aug. 5, 2021, the app has been downloaded around 30 million times. APE sales involving Pulse amounted to US$158 million for the first half of 2021.

Wells also provided an update on the company’s demerging with US business Jackson Financial, with Prudential expecting the process to complete in September, subject to shareholder approval. The demerger, Wells said, will complete the company’s strategic transformation to focus exclusively on its higher-growth and higher risk-adjusted return businesses in Asia and Africa.

“In order to enhance financial flexibility and de-lever the balance sheet, we continue to consider raising new equity of around US$2.5 billion to US$3 billion, following the completion of the proposed Jackson demerger,” Wells said. “Our preferred route is a fully marketed global offering to institutional investors concurrent with a public offering in Hong Kong to retail investors. As an Asia-focused company, we believe there are clear benefits from increasing both our Asian shareholder base and the liquidity of our shares in Hong Kong. The allocation of any offering will take into account a number of criteria including the interests of existing shareholders and the strategic benefits of enhancing our shareholder base and liquidity in Hong Kong.”

With the rollout of COVID-19 vaccination programmes across its various markets in 2021 and 2022, Prudential expects a gradual return to more normal economic patterns, although the pace of these programmes and their effect are likely to vary substantially, Wells said.

Strict COVID-19 restrictions remain in many of Prudential’s markets – including Indonesia, Malaysia, Thailand and the Philippines – while more stringent limitations on movement have recently been introduced in India, Singapore and Vietnam. Wells expects the impacts of these restrictions are likely to extend at least into the fourth quarter of this year.

“There is also continuing uncertainty over the extent and the timing of the re-opening of the border between Hong Kong and China, and we now expect that it will remain closed at least for the rest of this year,” Wells said. “However, we are confident that the demand for our products will continue to grow in line with the structural growth in our chosen markets, and that our expanded offering and increasingly digitalised distribution platforms are well placed to meet this demand.”

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